July 2024 Update
This month’s post is going to be focused on revisiting the items covered in the previous post. Those are important topics for the time being, and we want to make sure everyone is aware of them. The section below concerning data breaches and scams has been updated with some new information.
Liability Insurance Policy and Landlord Protection Program
On June 5, 2024 we sent out an email to all of our clients with some general updates and about changes to how we handle the liability insurance requirement of the management agreement, and the Optional Assurances program that many of you are participating in. If you missed the email please take a moment to read it, and if you didn’t receive it let us know so we can send it to you again. There will be follow up emails over the next several weeks as well. These emails will have important information so please keep an eye out for that correspondence.
Summer Leasing Season
Our internal tracking shows that vacancy time frames are getting shorter with properties leasing on average in 20-30 days versus 40-50 days just a few months ago. The property has to be priced correctly and possibly offer incentives to get leased quickly, and these are short term trends that could change quickly. They also don’t reflect a lot of external factors that have to be considered.
The market appears to continue adjusting rents downwards after the recent peak that occurred over the last few years. There are plenty of articles being published regularly along with data that can be found with a quick search. Here is a local article from KUT, and a broader take from Realtor.com.
We are working vigilantly to get lease renewals done, and if a property is vacant we want to get it leased as quickly as possible. With the leasing market slowing down now is a good time to talk to your property manager and discuss the best options to get things done well in advance of a renewal or vacancy. Renewals in particular are good to secure as early as possible since the market continually shifts with each passing day.
We’ve mentioned in the past that incentives are back in the leasing market, so considering some kind of offer proactively to attract a tenant to a vacant property or keeping them at lease renewal should be discussed with your property manager. Incentives can be offered to both new and renewing tenants. A reduced or free period of rent on a new lease is very common right now. With lease renewals some tenants may ask for something like cleaning the AC ducts or providing a mid-lease carpet cleaning for example, which is a small expense relative to a turnover. The act of simply not, or minimally, raising the rent when offering renewal terms is also a good way to keep a tenant who doesn’t want the expense and hassle of moving. While you don’t have to offer anything we want everyone to be aware about the increasingly competitive nature of the lease market.
Calculating Move Out Charges
While we try to keep tenants in a property as long as possible they will eventually move on. One question we get often is how we evaluate and calculate tenant charges when processing their deposit. The process of determining charges is not very clear cut in some aspects.
The law says we have to allow for “normal wear and tear,” however it is not defined and can be broadly interpreted by everyone. Our experience over the years has given us a good idea of what will and will not pass as over and above normal wear and tear if a dispute makes it to small claims court, however there is no guarantee on how it will be interpreted no matter how much evidence is provided.
Some of the factors that have to be taken into consideration are 1) what was the documented condition at the time the tenant moved in, 2) how long was the tenant in the property, and 3) what is the life expectancy of the materials and systems in the property. Below we’ll get a bit more into the details of these three factors:
Each tenant is given an inventory and condition form when they move in, and a deadline of 2 days after the lease commencement date to fill it out and turn it in. They are provided with a PDF that they can print and fill out by hand, or they can submit an online form that they can attach pictures to. It’s hard to say exactly how many tenants turn these in, but it’s fair to say about ½ will submit either the online or paper copy while the other ½ will not turn anything in. When nothing is turned in the lease by default presumes the property is in good condition, however we still have to rely on marketing photos, maintenance records, etc. when evaluating potential charges.
The length of a tenant’s stay in the home will make a difference in terms of the amount of wear and tear that has to be allowed. For example, a tenant that stayed for 1 year might have a few scuffs and scratches on the walls while a tenant who stayed for 4-5 years will have significantly more.
The age of the systems and materials in the property is very important. For example, a tenant who stayed in a property for 1 year would be expected to return the carpet at move out in nearly the same condition as move in, however a tenant who stayed in a property for 5 years is certainly going to put more wear on that same carpet. In the case that there is significant damage to something like the carpet we have to know when it was installed, how long the tenant lived there, and then take into account the life expectancy of the materials. We have a very detailed post that you can bookmark with more info about life expectancies.
Ultimately, tenant charges at move out is not a clearly defined process, and it requires the years of experience we have to avoid disputes. We certainly don’t get it right every time, but we’ve managed to work out any disputes we’ve had over the years.
Data Breaches and Scams
In our last few posts we’ve covered the recent AT&T and Ticketmaster breaches. This month we want to bring to light that AT&T has now also announced that their customer’s data was stolen including call logs and texts between “May 1, 2022 to October 31, 2022 as well as on January 2, 2023” was stolen.
Further, a new leak of driver’s licenses and other documents was leaked by an Israeli company AU1OTIX, which may not be familiar to you, but they handle age verification and/or user authentication for big companies like Uber, TikTok, X, Fiverr, Coinbase, LinkedIn, and Saxo Bank.
In the context of being a client of Stone Oak we want to continue reminding our clients about these breaches because a lot of this data can be used in social engineering and phishing attacks, which could involve your data being used by someone who poses as your property manager or other contact as part of a scam. We see these attempts internally as scammers send us email posing as fellow employees or managers of Stone Oak.
That being said, we want to remind you that we will never call you to ask to confirm or provide your bank info, social security number, or other personal information on the phone or by email. We will also never ask you to pay for anything with gift cards, cryptocurrency, etc. All of our emails will come from our domain, www.stoneoakmgmt.com, or through our software as a long string of letters/numbers from the domain @stoneoak.mailer.appfolio.us. Our property management software includes a texting service that will not match our office number, but if you try to call that number it will go directly to our main office phone line.
Here is some helpful information about Caller ID Spoofing, and other common scams. Here is a recent posting from Chase Bank about other common scams that are good to be aware of.
Please stay vigilant, maintain a healthy amount of skepticism, and contact us directly with the number on our website or our direct emails if anything looks questionable.
Corporate Transparency Act
In 2021 Congress passed the Corporate Transparency Act (CTA) that went into effect on January 1, 2024. This new law may apply to some of our clients, so we want to help spread awareness. If you own your investment(s), or anything else, in an entity such as an LLC or Corp, you may need to file information with the US Financial Crimes Enforcement Network (FINCEN). There is a summary of this new law available on the FINCEN brochure and additional information and resources on their website.
There are exemptions to this law, but it is strongly recommended that you speak to your legal advisor or accountant to discuss the requirements and compliance deadlines. There are many articles that have been published after the law’s passing, and quite a few since the end of 2023. More information can be found on this legalzoom.com article, using the official links above, or doing a search for the CTA to start your learning journey.
Reminders:
Holiday Hours
We have updated our company holiday calendar in an effort to give everyone here at Stone Oak more time off with their families and friends. You can find our updated holiday closing schedule at this link.
Maintenance Approval Process Changes
In addition to the info below about funding repairs we want to notify all owners that we are modifying our escalation process when we can’t reach our clients in order to make sure we are complying with property code requirements. In bonafide emergencies we are acting within our authority to mitigate damages, however after it has been contained or in non-emergency situations we reach out to our clients for work authorization that is required above the limit set in the management agreement. In those cases we now have a strict process going into effect that will have a time-based escalation if we cannot reach you. The time frame will be that if we can’t reach you by the 3rd day from when we first reached out we will then reach out to your emergency contact who can aid us in getting authorization or contacting you. If you’d like to update your emergency contact we have on file please contact your property manager. Keep in mind that this contact should be someone outside of your immediate household who you trust to make decisions on your behalf if you cannot be reached by them or us.
Funding Make-Readies & Maintenance for Your Property
Please note that it is Stone Oak's policy that the owner has reserve funding on hand with Stone Oak to help us commence work faster when it comes to make-readies and maintenance on your property. Stone Oak cannot perform maintenance without first receiving authorization and funding, which can slow down the turn-around times of our vendors and their availability in this market. This can also potentially create a negative experience that tenants will remember when it comes time to renew, and we always want to avoid turning over the tenants. Any time we request authorization for work on your property, the best practice is to immediately fund your account when you provide written authorization to move forward. This is as simple as going into your owner portal and using ACH for a free transfer, or if you prefer a credit card the processor charges a fee as part of the transaction.
Keep in mind that tenant charges on your account are not considered an offset to this amount as we keep a strict accounting system for both our and our client's benefits. Any tenant chargeable items will be posted to their account, and once they are paid it is immediately credited to your account. If you have any questions about this reserve amount held with Stone Oak please contact your property manager.
HOA Compliance Notices
Did you know your HOA can send important notices and compliance letters directly to Stone Oak to enforce? Yes! We can take care of that for you! Please be sure to provide your HOA with Stone Oaks direct contact information so we can ensure timely delivery of notices.
Please contact your PM for more information.
